How the European Social Fund and the Youth Employment Initiative support Youth Guarantee Schemes

Italian Presidency Conference “Youth Guarantee: First Results”

Rome, 14 October 2014

Minister Poletti,

Ladies and Gentlemen,

As President Barroso said at last week's Milan meeting on "Employment in Europe", we need to address the dramatic issue of Youth Unemployment which is one of the most important challenges facing the European Union today.

Indeed, our young people have largely borne the brunt of the protracted economic crisis. Five million young people under 25 are currently unemployed in Europe. An additional 7.5 million are neither in employment, education nor training. If we include those aged up to 29, the number of the so-called NEETs rises to approximately 14 million.

This means that we cannot hope for spontaneous job creation at a sufficient scale to ensure a job-rich recovery. Therefore, it is important to put in place strong employment policies which support both the quality of the labour supply and the demand for labour.

The Youth Guarantee is a prime example of such a comprehensive policy, and I consider it one of the key achievements of the Barroso II Commission.

As you know, the Youth Guarantee represents a commitment on the part of the Member States to ensure that all young people receive a quality offer of a job, traineeship, apprenticeship or the chance to continue their education, within four months of becoming unemployed or leaving formal education.

However, ensuring this in practice is not easy.

It requires improving the functioning of public employment services, increasing the quality of vocational education and training systems, promoting strong engagement between public authorities and the private sector, and possibly creating new financial support schemes.

Therefore, the Youth Guarantee represents a major structural reform in terms of ensuring better transition from education to work. The swift adoption of the Council Recommendation last year showed that the Member States understand the urgency of tackling youth unemployment and inactivity.

Involvement at the highest political level has been very helpful in keeping up momentum. Last week in Milan, the Heads of State or Government met for the third time to discuss youth employment. It shows their keen interest in ensuring swift and effective implementation of the Youth Guarantee.

All 28 Member States presented their Youth Guarantee Implementation Plans by summer this year, and the Commission reviewed them all.

This year most Member States received country-specific recommendations on the Youth Guarantee or wider youth employment-related issues under the European Semester process. And the Commission has taken other steps to respond to youth unemployment, including through the European Alliance for Apprenticeships and the Quality Framework for Traineeships.

This Conference is about ensuring that the considerable EU funding available to support the Youth Guarantee is put to good use quickly.

The European Social Fund and the targeted Youth Employment Initiative are the most important financial tools to support the implementation of the Youth Guarantee.

With nearly 12 billion euros across the EU each year, the European Social Fund will be the largest source of EU funding for reforming employment and education systems in the 2014-2020 period.

These reforms range from providing young people with job-search services to matching their skills with available jobs, and promoting apprenticeships or traineeships. They also include improving the quality of employment services and of education systems, increasing access to education and life-long learning, introducing modern teaching methods and flexible skills, and providing timely career guidance.

Besides these supply-side measures, the Youth Guarantee can also involve demand-side measures, such as targeted hiring subsidies or support to young entrepreneurs, who may subsequently create new jobs.

In addition to the € 6.4 billion available under the Youth Employment Initiative, we estimate that Member States will be spending an additional € 4 billion in connection with the investment priority dealing with sustainable integration of young people into the labour market.

So altogether, more than € 10 billion will be spent on the implementation of the Youth Guarantee.

However, financial support from the ESF relevant to the Youth Guarantee does not stop here. Many other investment priorities of the ESF under the 'employment' thematic objective are directly linked to the Youth Guarantee's delivery, such as modernisation of labour market institutions, support to access to employment for job-seekers and inactive people, or support to self-employment, entrepreneurship and business creation.

On the basis of the current draft ESF operational programmes, the Commission services estimate that about € 11 billion coming from these other investment priorities will benefit young people.

In addition, significant ESF resources programmed under the 'education' thematic objective can also contribute to the Youth Guarantee's delivery. Here I am referring for example to investments in prevention of early school-leaving or strengthening vocational education and training systems.

It is difficult at this stage to provide a very precise figure of how much funding under the thematic objective 'education' will support the Youth Guarantee.

However, this is not what really matters. What matters is to understand that the Youth Guarantee is a comprehensive structural reform which involves many elements, some of which need to be implemented in the short-term and others in the longer-term.

For example, promoting hiring subsidies or apprenticeship grants can be very useful in the short-term to provide a quality labour market opportunity to the existing stock of young NEETs.

On the other hand, investments in strengthening vocational education and training systems or improve functioning of public employment services will produce results only in a few years' time.

Do not get me wrong: all these tasks are urgent.

The main point here is that funding from the Youth Employment Initiative and from the ESF-proper need to be seen as complementary and need to be well-coordinated.

Ladies and Gentlemen,

As regards the Youth Employment Initiative, you know very well that this is dedicated instrument that offers support worth 6.4 billion euros for the direct provision of quality jobs, apprenticeships, traineeships, or continued education.

The Initiative targets regions with high youth unemployment rates in 20 Member States and focuses on young people not in employment, education or training.

This Initiative has been "frontloaded" in the sense that the 3.2 billion of additional top-up funding has to be committed by Member States during 2014-15. This should ensure speedier absorption and thus more decisive action to help unemployed or inactive young people as soon as possible.

In addition, Member States have been able to support measures relevant to the Youth Employment Initiative since September 2013. Thanks to this "early eligibility clause", the Commission will reimburse Member States once the Operational Programmes are adopted.

Last but not least, in the new, integrated multi-Fund context of the current programming cycle, we need to ensure that the European Social Fund and the Youth Employment Initiative achieve good synergy with other Funds and programmes.

These include the European Regional Development Fund, which provides significant support for instance in terms of education infrastructure development as well as support to SMEs.

The Erasmus+ education programme also provides considerable support by strengthening the links between the world of education and the world of business, for instance through mobility projects, strategic partnerships, entrepreneurship education, work-based learning and apprenticeships.

Ladies and Gentlemen,

As of today, only a handful of operational programmes under the European Structural and Investment Funds have been adopted. However, we expect many more to be adopted by the end of the year. To be more precise, we expect roughly 85% of the Youth Employment Initiative – or some € 5.4 billion – to be programmed by December.

I want to congratulate Italy, which currently holds the Presidency and is our host at this conference, on being one of the first Member States to get their Youth Employment Initiative operational programme adopted — back in July in fact.

It will be interesting to hear about Italy’s experience to date in implementing its Youth Guarantee.

But where do we stand in terms of results?

In reply to my letter of last July asking for estimates of expenditure and the number of persons to be supported in 2014, Member States have reported ambitious goals as regards the roll-out of the European Social Fund and Youth Employment Initiative measures.

They estimate that, by the end of the year, they will spend nearly € 844 million of European Social Fund and Youth Employment Initiative resources on youth employment measures under the 2014-2020 period.

The Member States estimate that this funding will benefit over 886 000 young people this year alone, of which over 376 000 should receive a quality job, apprenticeship, traineeship or continued education offers under the Youth Guarantee.

I am glad that the Directors-General for vocational training are here today. This will help create closer links between public authorities in charge of vocational training and the European Social Fund managing authorities and Youth Guarantee coordinators in the Member States.

Investing effectively in education and training is vital and concrete steps are needed to address systemic shortcomings, such as a lack of highly qualified, competent teaching and training staff.

Similarly, responsibility for supplying the skills needed on the labour market must be shared by businesses, education providers, including vocational education and training schools, and other stakeholders, as well as the students themselves.

One aspect closely tied up with improving education and skills is the recognition and transparency of qualifications, including those gained outside formal education, which need facilitating across the Union.

We must also make sure that people from disadvantaged backgrounds have fair access to education and training.

All these reforms need careful planning and a long-term commitment.

The technical workshops on work-based learning and getting young people into education and training pathways will provide food for thought on these issues, as will those on self-activation through mobility and entrepreneurship and the role that employment services can play in making the Youth Guarantee a success.

Ladies and gentlemen,

This conference, I hope, will show how the European Social Fund and Youth Employment Initiative can and already do support action on the ground.

The legal framework is in place. The Commission has provided several guidance documents, offered training to the authorities involved and also facilitated mutual learning between them.

All the Member States have adopted their Youth Guarantee implementation plans and discussion of operational programmes is at an advanced stage.

The future of the Youth Guarantee is now mainly in the hands of Member States who need to take action on the ground. The Commission will, of course, continue to provide support.

I wish you a stimulating conference with the chance to share experience on using the European Social Fund, the Youth Employment Initiative and other funding instruments to the greatest possible effect so that we manage to improve the young generation’s prospects of a viable future.